Marquez v. Mercedes-Benz Usa, LLC

Decision Date09 April 2008
Docket NumberNo. 2007AP681.,2007AP681.
Citation2008 WI App 70,751 N.W.2d 859
PartiesMarco A. MARQUEZ, Plaintiff-Respondent, v. MERCEDES-BENZ USA, LLC, Defendant-Appellant.
CourtWisconsin Court of Appeals

On behalf of the defendant-appellant, the cause was submitted on the briefs of Patrick L. Wells and Thomas Armstrong of von Briesen & Roper, S.C. of Milwaukee.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Vincent P. Megna and Susan M. Grzeskowiak of Waukesha.

Before BROWN, C.J., ANDERSON, P.J., SNYDER, J.

¶ 1 BROWN, C.J

The manufacturer of a "lemon" vehicle has thirty days to fulfill a consumer's request for replacement or refund under Wisconsin's Lemon Law. The state's courts have consistently refused to extend or ignore this deadline when the manufacturer and consumer could not reach agreement on refund details, or to allow a manufacturer to impose its own conditions on the consumer's refund. Our position has been that the Lemon Law lays out the consumer's obligations, and that once those are met, it is the manufacturer's responsibility to make the refund or replacement happen within thirty days. See Herzberg v. Ford Motor Co., 2001 WI App 65, ¶ 17, 242 Wis.2d 316, 626 N.W.2d 67. If the manufacturer does not do so, the consumer will be entitled to the harsh statutory remedies, including double damages. As we said in Chariton v. Saturn Corporation, 2000 WI App 148, ¶ 5, 238 Wis.2d 27, 615 N.W.2d 209, "[t]here are no excuses."

¶ 2 However, each of our previous cases has involved a manufacturer making an "excuse" for its decision not to provide a refund within the allotted time. What if, on the other hand, the manufacturer tries to pay the refund but is intentionally prevented from doing so by the consumer? Though we have never had to answer this question, we have anticipated that it could arise. In Herzberg, 242 Wis.2d 316, ¶ 18, 626 N.W.2d 67, we stated that the statute contemplates both the manufacturer and the consumer acting in good faith, though we did not say exactly what "good faith" requires in this context. In Chariton, 238 Wis.2d 27, ¶ 3 n. 3, 615 N.W.2d 209, we raised but did not answer the question of "whether the consumer has a duty to communicate promptly with the manufacturer regarding the details of the refund."

¶ 3 This appeal requires us, for the first time, to define a consumer's good faith obligations relating to the Lemon Law. The manufacturer here claims that the consumer intentionally thwarted its attempt to make a refund by failing to provide necessary information about the consumer's auto loan. We hold that, if this is found to be true, the consumer is not entitled to the Lemon Law's statutory remedies. The legislature could not have intended that the consumer be allowed to block a manufacturer from complying with the statute and then reap the rewards of noncompliance. We therefore reverse the circuit court's grant of summary judgment to the consumer. We conclude that the record presents a genuine issue of material fact as to whether the consumer acted in bad faith, and so we remand for trial.

¶ 4 There is no dispute about most of the facts. Marco Marquez bought a new Mercedes from a Milwaukee dealer. He financed this purchase with a loan from Waukesha State Bank. The car turned out to be a lemon, and Marquez eventually sent Mercedes-Benz USA ["MB"] a demand for a refund, which MB received on October 28, 2005. In the following days, Marquez and a representative of MB had phone conversations about the possibility of Marquez exchanging his car for a different model and paying any price difference. On November 23 (the day before Thanksgiving), Marquez told the representative that he did not want a different model and instead wanted his refund. The representative told Marquez that he would contact him the Monday after the weekend to arrange the details of the payment. That Monday was November 28, or thirty-one days after MB received Marquez's Lemon Law notice.1 On that day, the MB representative again called Marquez.

¶ 5 However, the parties do not agree on the precise substance of this conversation, or on what happened afterward. The representative stated at deposition that he told Marquez he had contacted the bank and they would not provide him with the payoff information because of privacy laws, and he asked Marquez to contact the bank, get the payoff information, and relay it back to him. According to the MB representative, Marquez agreed to call him back with the payoff information that afternoon. Marquez, on the other hand, deposed that he did not remember the representative asking him to contact the bank. He also stated that he told the representative that he would call his attorney.

¶ 6 That afternoon, the representative also called Marquez's attorney's office, but was unable to get through to an attorney. He left a message saying "Please call me back." He did not hear back from either Marquez or his attorney on that day, and the thirtieth day passed with no refund to Marquez. The next day, Marquez filed this action. The circuit court ultimately granted summary judgment to Marquez.

¶ 7 Summary judgment is granted when there are no genuine issues of material fact and one party is entitled to a judgment as a matter of law. WIS. STAT. § 802.08 (2005-06).2 We review the circuit court's grant of summary judgment without deference, applying the same methodology as the circuit court. State v. Bobby G., 2007 WI 77, ¶ 36, 301 Wis.2d 531, 734 N.W.2d 81. This case requires interpretation of the Lemon Law statute, which also presents questions of law that we review de novo. See State v. Johnson, 2007 WI App 41, ¶ 4, 299 Wis.2d 785, 730 N.W.2d 661.

¶ 8 The Lemon Law allows the purchaser of a new car which does not conform to its warranty to receive a refund (or a comparable new vehicle) after reasonable attempts to repair the car have failed. WIS. STAT. §§ 218.0171(1)(b)1., (2)(a)-(b). To initiate the refund process, the consumer must offer to transfer the faulty vehicle's title to the manufacturer. Sec. 218.0171(2)(c). The manufacturer then has thirty days to make the refund. Id. A manufacturer who fails to meet this deadline may be subject to double damages, attorney fees, costs, and equitable relief in a subsequent action. Sec. 218.0171(7).

¶ 9 MB argues that it was impossible for it to make a proper refund because it did not know how much Marquez owed the bank on his auto loan, and that it was required to pay this amount to the bank as part of the refund. MB further claims that Marquez's failure to provide that information amounts to bad faith. Before we address whether Marquez's conduct might constitute bad faith, we will consider whether MB in fact needed the information it sought from Marquez.

¶ 10 Marquez successfully argued before the circuit court that MB did not need to know the payoff amount for the loan, because it could have given a single check for the entire refund to Marquez, and let Marquez and the bank settle the loan between themselves. We acknowledge that, as a general matter, a payor can write a multiple-party check that requires the consent of all payees to cash. See 11 AM.JUR.2D Bills and Notes § 205 (1997). However, the question here is not about general check-writing principles, but about whether handing one lump-sum check to Marquez would put MB in compliance with the Lemon Law. We conclude that it would not. The bank was listed as a secured party on the title application, giving it a perfected security interest in the car. See WIS.STAT. § 342.19(2). The Lemon Law requires the manufacturer to "refund [the purchase price and other costs] to the consumer and to any holder of a perfected security interest in the consumer's motor vehicle, as their interest may appear." WIS.STAT. § 218.0171(2)(b)2.b. (emphasis added). In our view, the plain and ordinary meaning of the phrase "refund to ... any holder of a perfected security interest ... as [its] interest may appear" involves the payor transferring the correct sum to the secured lender—not, as Marquez suggests, giving a lump-sum check to the consumer and leaving him or her to sort it out with the lender. To comply with the Lemon Law, MB was required to write a separate check to Waukesha State Bank paying off its interest in the car.

¶ 11 However, Marquez argues that even if MB needed to know the correct payoff amount to pay the refund, it already had in its possession all of the information it needed to calculate the payoff amount on its own. Marquez points out that the loan document, which laid out the interest and payment terms, was appended to the Lemon Law notice, and therefore claims that MB needed only do some simple arithmetic to know how much to pay the bank and how much to pay Marquez. Again, we cannot agree. The loan document gives no information about Marquez's history of payment; he might well have made early payments or been delinquent in the six months that passed between the purchase of the car and the delivery of the notice. Without current information, MB would have no way of knowing whether it was paying the correct amounts to Marquez and to the bank. For this reason, the standard Lemon Law notice form distributed by the state Department of Transportation includes a line for a consumer to provide the name of the loan provider and the loan account number, along with the statement that "[b]y providing this information, I authorize the manufacturer to contact this financial institution for financing information needed to calculate a refund."3 As MB points out, Marquez included his lender name and loan account number with his Lemon Law notice, suggesting that he recognized that MB would need more precise loan information than it had.4

¶ 12 We therefore conclude that MB did, in fact, need further payoff information to make the proper refund under the Lemon Law. We must therefore address the second issue in this case: If...

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